FIRST
AMENDMENT TO LOAN AGREEMENT





by
and among





AMOROS
MARITIME CORP.,


LANCASTER
MARITIME CORP.


AND


CHATHAM
MARITIME CORP.,





as
Borrowers,








TBS
INTERNATIONAL LIMITED,





as
Parent Guarantor,





SHERWOOD
SHIPPING CORP.





as
Guarantor, and





AIG
COMMERCIAL EQUIPMENT FINANCE, INC.,





as
Lender








March
27, 2009














FIRST AMENDMENT TO LOAN
AGREEMENT





THIS FIRST AMENDMENT TO LOAN
AGREEMENT (this “First Amendment”) is made and entered into this 27th day
of March, 2009, by and among Amoros Maritime Corp., Lancaster Maritime Corp. and
Chatham Maritime Corp., each a Marshall Islands corporation having a mailing
address of P.O. Box HM 2522, Hamilton HMGX, Bermuda and a registered address of
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands
MH96960 (the “Borrowers”; each, a “Borrower”), TBS International Limited, a
Bermuda corporation (“Parent Guarantor”), Sherwood Shipping Corp. (“Sherwood”)
and AIG Commercial Equipment Finance, Inc., a Delaware corporation (together
with its successors and assigns, “Lender”).WHEREAS,Borrowers, Parent
Guarantor and Lender are parties to that certain Loan Agreement dated February
29, 2008 (the “Original Loan Agreement,” as amended by this First Amendment and
any future amendments, the “Loan Agreement”); and





WHEREAS, Borrowers delivered
the Notes to evidence their Loan under the Loan Agreement, including that
certain US$13,000,000 Promissory Note by Lancaster Maritime Corp., that certain
US$9,000,000 Promissory Note by Amoros Maritime Corp., and that certain
$13,000,000.00 Promissory Note by Chatham Maritime Crop., each payable to the
order of Lender and dated February 29, 2008; and





WHEREAS,Sherwood wishes to
secure the Obligations by delivering its Secured Guaranty of even date herewith
and by granting a first priority mortgage on the vessel “Zia Belle,” having
Panamanian registration number 38142-PEXT (the “Zia Belle”) which shall be added
to the Vessels subject to the Loan Agreement; and





WHEREAS,the parties wish to
amend the Loan Agreement and Notes in various respects, including (i) a 175
basis point increase in the Margin, (ii) a 200 basis point increase in the
lowest applicable Interest Rate, (iii) the elimination of the one and the two
month options for LIBOR terms currently available to Borrowers, (iv) increases
in applicable Prepayment Fees to (x) three percent (3.0%) for any prepayments
occurring on or prior to the first anniversary of the effective date of this
First Amendment, (y) two percent (2.0%) for any prepayment occurring after the
first anniversary but on or prior to the second anniversary of this First
Amendment, and (z) one percent (1.0%) for any prepayments occurring after the
second anniversary of the date of this First Amendment, (v) the restructuring of
the quarterly principal installments due April 1, 2009, July 1, 2009, and
October 1, 2009, to be due upon the effective date of this First Amendment, (vi)
the addition of an EBITDA to Interest financial covenant, and a waiver of
Borrowers’ compliance with the financial covenants contained in Sections 6.10
(a), (c) and (d) for  the 2009 fiscal year (and each fiscal quarter
thereof), and (vii) a waiver of Borrowers’ compliance with Section 5.12 for the
2008 fiscal year, among other matters more fully addressed below.





NOW, THEREFORE, in
consideration of the foregoing and other good and valuable consideration, the
receipt of which is hereby acknowledged, Borrowers and Lender hereby agree as
follows:


1.The following new
definitions are added to Section 1.01 of the Original Loan
Agreement:


“Consolidated Interest Coverage
Ratio” means, at any date of determination, the ratio of (a) the result
of (i) Consolidated EBITDA, less (ii) the sum of
(x) Federal, state, local and foreign income taxes paid in cash and (y)
Restricted Payments made, in each case, for the most recently completed
Measurement Period, to (b) Consolidated Interest Charges for the most
recently completed Measurement Period.





The
definitions of “LIBOR Period” and “Existing Credit Agreement” are deleted from
the Original Loan Agreement.





2.   The
following definitions are amended and restated.  In the case of the
revised definitions of “Adjustment Period” and “LIBOR Rate”, such amendment and
restatement shall take effect on April 1, 2009.  All other changes
shall take effect as of the date of this First Amendment.





“Adjustment Period”means a
successive series of three month or quarterly periods following the first
Adjustment Period.  The first Adjustment Period shall begin on the
Initial Funding Date, and continue until the last day of the calendar quarter in
which the Initial Funding Date occurs, or March 31, 2008.  Thereafter,
each successive Adjustment Period during the term of the Loans shall be a
Calendar Quarter. For the avoidance of doubt, the first full Adjustment Period
following the date of the First Amendment shall commence April 1, 2009, and end
on June 30, 2009.




“Assignment of Charter
Hire” shall mean, for each Borrower and for Sherwood, that certain
Assignment of Charter Hire by Borrower or Sherwood in favor of Lender, as
applicable, and that certain Assignment of Charter Hire by Charterer, by the
assignors party thereto, in favor of Lender, each related to the Vessel owned by
the Borrower or Sherwood, as applicable and dated as of the date of the
Borrower’s or Sherwood’s Ship Mortgage, as amended, supplemented and modified
from time to time in accordance with the terms thereof.  “Assignments
of Charter Hire” shall collectively refer to all Assignments of Charter
Hire.




“Assignment of Insurances”
shall mean, for each Borrower and Sherwood, that certain Assignment of
Insurances by Borrower or Sherwood (as applicable) and the other assignors party
thereto in favor of Lender dated as of the date of Borrower’s or Sherwood’s Ship
Mortgage, as amended, supplemented and modified from time to time in accordance
with the terms thereof.  “Assignments of Insurances” shall
collectively refer to all Assignments of Insurances.




“Collateral” means,
collectively, the Vessels, all of Sherwood’s or each Borrower’s property that is
encumbered by a Ship Mortgage from time to time during the term of this
Agreement, all other collateral securing the Loans, and all substitutions and
replacements therefor, including all component parts and
appurtenances.  It is the intent of Borrowers, Sherwood and Lender
that the Collateral secure the entire Obligations owed to Lender by the
Borrowers.





“Consolidated EBITDA” means,
at any date of determination, an amount equal to Consolidated Net Income of
Parent Guarantor and its Subsidiaries on a consolidated basis for the most
recently completed Measurement Period, plus (a) the
following to the extent deducted in calculating such Consolidated Net Income
(and without duplication):  (i) Consolidated Interest Charges, (ii) the
provision for Federal, state, local and foreign income taxes payable, (iii)
depreciation and amortization expense, (iv) net losses from the sales of vessels
as permitted under the BofA Credit Agreement and (v) any noncash impairment
charges incurred during each fiscal year of Parent Guarantor and its
Subsidiaries ending December 31, 2009 in respect of any of Parent Guarantor’s or
its Subsidiaries’ goodwill and vessels, (in each case of or by Parent Guarantor
and its Subsidiaries for such Measurement Period) and minus (b) the
following to the extent included in calculating such Consolidated Net Income,
all net gains from the sales of vessels as permitted under the BofA Credit
Agreement (in each case of or by Parent Guarantor and its Subsidiaries for such
Measurement Period); provided that, to the extent
characterized as interest on the income statements of Parent Guarantor and its
Subsidiaries for such Measurement Period pursuant to FASB Interpretation No. 133
– Accounting for Derivative Instruments and Hedging Activities (June 1998),
noncash adjustments in connection with any interest rate swap contract entered
into by Parent Guarantor or any of its Subsidiaries, shall be
excluded.





“Consolidated Interest
Charges” means, for any Measurement Period, the sum of (a) all interest,
premium payments, debt discount, fees, charges and related expenses in
connection with borrowed money (including capitalized interest but excluding
capitalized interest on Permitted New Vessel Construction Indebtedness) or in
connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, (b) all interest paid or
payable with respect to discontinued operations and (c) the portion of rent
expense under Capitalized Leases that is treated as interest in accordance with
GAAP, in each case, of or by Parent Guarantor and its Subsidiaries on a
consolidated basis for the most recently completed Measurement Period; provided that, to the extent
characterized as interest on the income statements of Parent Guarantor and its
Subsidiaries for such Measurement Period pursuant to FASB Interpretation No. 133
– Accounting for Derivative Instruments and Hedging Activities (June 1998),
noncash adjustments in connection with any interest rate swap contract entered
into by Parent Guarantor or any of its Subsidiaries, shall be excluded.





“Interest Rate” means, for
each Loan, a rate over each Adjustment Period equal to the greater of (a) seven
percent per annum, or (b) LIBOR Rate PLUS the Margin per annum, adjusted for
each Adjustment Period effective as of the first day of each Adjustment
Period.  The Interest Rate is subject to the default rate of interest
now or hereafter set forth in each Note, which default rate shall be equal to
the lesser of (i) the Interest Rate plus 2.0%, or (ii) the maximum rate of
interest permitted by Applicable Law.   At no time will the
Interest Rate ever be less than seven (7%) percent per annum.


"LIBOR Rate" shall mean, for
each Adjustment Period, the rate per annum equal to the arithmetic mean
(rounded to the nearest 1/100th of 1%) of the offered rates for deposits in
Dollars with a term of three months or ninety days, as published by the British
Bankers' Association (on its internet website at www.bba.org.uk (or in
the event such rate is not so published, in such other nationally recognized
publication as Payee may specify) at approximately 11:00 a.m., London, England
time, on the day that is the last London Banking Day immediately preceding the
first day of such Adjustment Period, with adjustments to be effective as of the
first day of such Adjustment Period; provided, however, that (i) if no
comparable term of three months or ninety days is available, the LIBOR Rate
shall be determined using the weighted average of the offered rates for the two
terms most nearly corresponding to such term and (ii) if the British Banker’s
Association shall no longer publish such a rate, "LIBOR Rate" shall mean in
such other nationally recognized publication as Lender may
specify).




“Margin” means three and one
half of one percent (3.50%), unless the sum of the Margin and the LIBOR Rate on
the first day of an Adjustment Period is less than seven percent per annum, in
which case the Margin shall equal the difference between seven percent per annum
and the LIBOR Rate in effect on such date, resulting in an Interest Rate of at
least seven percent per annum at all times during the term of this
Agreement.





“Measurement Period” means, at
any date of determination, the most recently completed four fiscal quarters of
Parent Guarantor.  Provided, in the case of the Consolidated Interest
Coverage Ratio, the Measurement Period for the quarterly calculations for the
quarter annual periods ending (i) on June 30, 2009 means the most recently
completed two fiscal quarters of Parent Guarantor, and (ii) September 30, 2009
means the most recently completed three fiscal quarters of Parent
Guarantor.





“Philippine Charterer” means
(a) for the Mohave Maiden, the Hopi Princess, and the Zuni Princess, CFS
Bareboat Corp., (b) for the Zia Belle, General Charterers, Inc. or (c) with
respect to any Vessel, any other Person approved in writing by Lender to
bareboat charter the Vessel to permit the Charter Registry of the Vessels in the
Republic of the Philippines.





“Security Documents” means the
Guaranty Agreements, the Assignments of Charter Hire, the Assignments of
Insurances, the Ship Mortgages and all other documents now or hereafter
constituting security for the Loans, including the Ship Mortgage by Sherwood on
the vessel “Zia Belle.”





“Ship Mortgage” shall mean,
with respect to each Borrower or Sherwood, that certain Panamanian First Naval
Mortgage to be executed by or on behalf of such Person in favor of Lender
encumbering the Vessel owned by such Person, to be recorded in the office of
thePanama
Registry, as amended, supplemented and modified from time to time in accordance
with the terms thereof.  “Ship Mortgages” shall collectively refer to
the Ship Mortgages of Borrowers and Sherwood.





“Vessel” means, for each
Borrower or Sherwood, the vessel listed next to such Person’s name on Schedule 1
hereto.  The term “Vessel” shall include, without limitation, all on
board equipment, machinery and supplies.  “Vessels” shall collectively
refer to all of the Vessels described on Schedule 1.





3.   Section
2.03 of the Original Loan Agreement is amended and restated to read as
follows:





Section 2.03.The
Notes.  Each Loan and
each Borrower’s obligation to repay its Loan shall be evidenced by and repayable
with interest in accordance with the terms of such Borrower’s Note in the form
attached hereto as Schedule 2.03, as amended by an addendum (the “Addendum”) in
the form attached to the First Amendment as Schedule 2.03A.  Principal
and interest payable under each Note shall be repaid in accordance with the
repayment terms set forth in the Note, as amended by the applicable
Addendum.  Each Note provides for a default rate of
interest.





4.   Section
2.06 of the Original Loan Agreement is amended and restated to read as follows,
effective as of April 1, 2009:





Section 2.06.Changes
to LIBOR Rate.   The LIBOR
Rate in effect hereunder shall be increased or decreased, as the case may be,
effective as of the first day of each Adjustment Period during the term of this
Agreement, in the case of each Adjustment Period, by an amount equal to any
increase or decrease in the LIBOR Rate from the immediately preceding Adjustment
Period, as more fully set forth in each Note.





5.   With
respect to Section 4.05, and the other covenants and provisions of the Loan
Documents pertaining to a “Material Adverse Change” or “Material Adverse
Affect”, Lender agrees, in determining whether a Material Adverse Change or
Material Adverse Effect has occurred or exists, for calendar year 2009 only,
that Lender will disregard the effect of changes in accounting position
resulting from any increase in liability under interest rate swap contracts, or
any decrease in asset value resulting from reductions to the book value of
goodwill or any vessel or other item otherwise required under applicable
accounting standards.  Commencing on January 1, 2010, the
determination of compliance with all financial covenants, and the occurrence of
a Material Adverse Change or Material Adverse Effect, will revert to a
determination based on the results determined by application of GAAP,
consistently applied.





6.   The
first paragraph of Article V of the Original Loan Agreement is amended and
restated to read as follows:





Each
Borrower, severally, and Sherwood agrees as follows.  So long as any
Borrower’s Note shall remain unpaid or any Borrower shall have any unfulfilled
or undischarged obligations or duties under the Loan Documents, the Security
Documents or any related agreements, each Borrower, severally, and Sherwood will
comply with the following requirements. References in this Article V to Note
shall be to the Borrower’s Note, to Vessel shall be the Vessel applicable to
such Borrower or Sherwood, and to Collateral shall be the Collateral provided
directly by Borrower or Sherwood.





7.   Section
5.03 of the Original Loan Agreement is amended and restated to read as
follows:





Section 5.03.Insurance.  Each Borrower or
Sherwood, as applicable shall obtain and maintain insurance on the Vessel owned
by it in accordance with the terms of Schedule
5.03 hereto.  In addition, as to other business properties
owned by Borrower or Sherwood, Borrower or Sherwood shall obtain and maintain
insurance with insurers believed by Borrower or Sherwood to be responsible and
reputable and reason­ably acceptable to Lender, in such amounts and against
such risks as is usually carried by companies engaged in similar business and
owning similar properties in the same general areas in which Borrower or
Sherwood operates or as may be required by any applicable laws, orders or
regulations or as may reasonably be requested by Lender.  Borrower or
Sherwood, as applicable, shall promptly provide Lender with evidence of such
insurance coverage.  Additionally, Borrower or Sherwood, as
applicable, shall provi­de not less than thirty (30) days advance written
notification to Lender in the event of cancellation or material change in the
terms of such coverage.





8.   Section
5.05 of the Original Loan Agreement is amended and restated to read as
follows:





Section 5.05.Inspection.  At any reasonable
time and from time to time, upon prior notice to Borrower or Sherwood, Lender or
any agents or representatives of Lenders shall be allowed to examine and make
and prepare copies of and abstracts from the records and books of account of,
and visit and inspect the Collateral and the other properties of, Borrower or
Sherwood and the other Loan Parties and to discuss the affairs, finances and
accounts of Borrower, Sherwood or any other Loan Party with any officer of such
Person.





9.    Section
5.06 of the Original Loan Agreement is amended and restated as
follows:





Section 5.06.Maintenance
of Properties, Etc.  Borrower or
Sherwood shall maintain and preserve the Collateral owned by it and all of its
other properties necessary or useful in the proper conduct of its current
business in good mechanical condition and running order, ordinary wear and tear
excepted.





10.   Section
5.10 of the Original Loan Agreement is amended and restated as
follows:





Section 5.10.  Ownership
of Borrower, Sherwood and Parent Guarantor.  Parent Guarantor
shall own 100% of all the issued and outstanding shares of Westbrook Holdings
Ltd. (“Westbrook”).  Westbrook shall own 100% of the all of the issued
and outstanding shares of Sherwood and each Borrower.  There shall be
no sale, transfer, pledge, donation, hypothecation, alienation or other
encumbrance of any of the outstanding shares of Borrower, Sherwood or Westbrook,
other than a transfer of the shares of Westbrook to either Parent Guarantor or a
wholly owned subsidiary of Parent Guarantor.





11.   Section
5.12 of the Original Loan Agreement is amended and restated as
follows:





Section
5.12     Valuation.  Borrowers will
deliver to Lender as soon as available, but in any event within 30 days after
the end of each fiscal year (except the fiscal year ending December 31, 2008) a
certificate executed by an Officer setting forth the Fair Market Value of the
Vessels as of such fiscal year end and attaching the most recent Valuation of
the Vessels as of such date.





If for
any reason at any time the Total Outstanding shall exceed the Loan Value, the
Borrowers shall immediately prepay the Loans in an aggregate amount equal to
such excess; provided that, the Borrowers shall not be required to make such
prepayment of the Loans so long as (A) no Default or Event of Default shall have
occurred or then be continuing and (B) within 10 days of any such event (or, in
the case of any Disposition of a Vessel, prior to any such Disposition), (x) the
Borrowers pledge additional vessels (to be accepted by Lender in its sole
discretion)s having an appraised fair market value sufficient to eliminate such
deficiency or (y) the Borrowers cause another Subsidiary of Parent Guarantor
(which may be an Excluded Subsidiary) to join this agreement and such Person
pledges additional vessels having an appraised fair market value sufficient to
eliminate such deficiency, in each case, such pledge to be in a manner and
pursuant to documentation satisfactory in all respects to the Lender, and to
include a Valuation of such additional vessels and documentation and information
acceptable to Lender.





12.   The
first paragraph of Article VI of the Original Loan Agreement is amended and
restated to read as follows:





Each
Borrower, severally, and Sherwood agrees as follows.  So long as any
Borrower’s Note shall remain unpaid or any Borrower shall have any unfulfilled
or undischarged obligations or duties under the Loan Documents, the Security
Documents or any related agreements, each Borrower, severally, and Sherwood will
comply with the following requirements. References in this Article VI to Note
shall be to the Borrower’s Note, to Vessel shall be the Vessel applicable to
such Borrower or Sherwood, and to Collateral shall be the Collateral provided
directly by Borrower or Sherwood.  The negative covenants of Article
VI with respect to each Borrower or the Vessel or Collateral owned by a Borrower
shall also apply to Sherwood, and the Zia Belle and the Collateral owned by
Sherwood.  Without limitation of the foregoing, the Single Purpose
Entity Restrictions of Section 6.09 shall also apply to Sherwood.





13.   Section
6.10 of the Original Loan Agreement is amended and restated to read as
follows:





Section
6.10Financial
Covenants.  Borrower
covenants and agrees that for the term of this Agreement that Parent Guarantor
and its consolidated Affiliates and Subsidiaries shall not violate, on a
consolidated basis, the following financial covenants:





(a)  Minimum Consolidated
Tangible Net Worth.   The Consolidated Tangible Net Worth
at any time shall not be less than the sum of (i) $235,000,000.00 plus (ii) an amount
equal to 75% of the Consolidated Net Income earned in each full fiscal quarter
ending after September 30, 2007 (with no deduction for a net loss in any
such fiscal quarter) and (iii) an amount equal to 100% of the aggregate
increases in Shareholders’ Equity of Parent Guarantor and its Subsidiaries
after September 30, 2007 by reason of the issuance and sale of Equity
Interests of Parent Guarantor or any Subsidiary (other than issuances to Parent
Guarantor or a wholly-owned Subsidiary), including upon any conversion of debt
securities of Parent Guarantor into such Equity Interests.




(b)  Minimum Cash
Liquidity.  Qualified Cash, plus Availability in
an average daily amount during such calendar month shall not be less than (a)
for the calendar months during 2008, $15,000,000.00, (b) for the months during
2009, $40,000,000.00, and (c) for each calendar month ending on or after January
31, 2010, $15,000,000.00.




(c)  Maximum Consolidated
Leverage Ratio.  The Consolidated Leverage Ratio at any time
shall not be greater than 3.00:1.00.




(d)  Minimum Consolidated Fixed
Charge Coverage Ratio.  The Consolidated Fixed Charge Coverage
Ratio at any time shall not be less than 1.50:1.00.




(e)  Consolidated Interest
Coverage Ratio.  The Consolidated Interest Coverage Ratio shall
not be less than:  (a) for the six months ending June 30, 2009,
1.10:1.00; (b) for the nine months ending September 30, 2009, 1.35:1.00; and (c)
for the fiscal year ending December 31, 2009, 1.75:1.00.





Unless
otherwise required by Lender as a result of a Default or a Material Adverse
Change in a Borrower’s or Guarantor’s financial position, compliance will be
tested on a quarterly basis on each March 31st, June 30th, September 30th and
December 31st, based on the quarterly consolidated financial statements of
Parent Guarantor.  Notwithstanding anything herein to the contrary (i)
compliance with the financial covenants described in Sections 6.10 (a), 6.10(c)
and 6.10(d) shall not be measured during any quarter in the fiscal year ending
December 31, 2009, and (ii) compliance with the financial covenant described in
Section 6.10(e) shall be measured only for the periods described
therein.





14.   The
agreement of Lender to enter into this First Amendment is subject to the
condition precedent that Lender shall have received all of the following, in
form and substance acceptable to Lender in its sole discretion:





(a)
executed Addendums to the Notes, the Secured Guaranty of Sherwood in the form
attached hereto as Schedule
14(a)(1) and the other Security Documents in connection with the Zia
Belle;





(b)
evidence that all insurance policies and insurance coverages required under any
of the Loan Documents with respect to the Zia Belle are in full force and
effect;





(c)
opinions of counsel of Borrowers, Parent Guarantor, and Sherwood with respect to
this First Amendment and the Security Documents (including the new Security
Documents in connection with the Zia Belle), confirming Lender’s first priority
ship mortgage on the Zia Belle;





(d) UCC
search under the name Sherwood Shipping Corp., reflecting that no UCC filings
exist with respect to any of the Collateral owned by Sherwood Shipping
Corp.;





(e)
copies of the Articles of Incorporation and Bylaws or other organizational
documents of Sherwood, certified by an authorized officer of such entity as
being true and correct copies thereof;





(f)
signed copies of a certificates of an authorized officer of Borrowers, Parent
Guarantor, and Sherwood which shall certify the names of the officers of such
entities authorized to execute and deliver this First Amendment and the other
Loan Documents to which such entities are a party, and other documents or
certificates to be delivered pursuant to this First Amendment or the related
Security Documents, together with the true signatures of such
officers;





(g)
copies of the appropriate resolutions and consents of Borrowers, Parent
Guarantor, and Sherwood approving the First Amendment and related Loan
Documents, certified by the Secretary (or other appropriate official) of such
party as being a true and correct copy thereof;





(h) a
good standing certificate with respect to Sherwood, issued as of a recent date
by the Secretary of State or other appropriate and authorized official of
Sherwood’s respective jurisdiction of incorporation;





(i)
evidence of the proper registry of the Zia Belle in the provisional maritime
registry of the Panama Registry as reflected in registration certificates for
the Vessel, and the acceptance of such registry by the applicable authorities in
the office of the Panama Registry, including the Certificate of Provisional
Registry for the Vessel and  Patente Provisional de
Navegacion;





(j) copy
of the ownership and registration certificate for the Zia Belle issued by the
applicable Panamanian authorities;





(k) duly
executed and filed Security Documents establishing in Lender, as determined by
Lender’s counsel, a first preferred mortgage in the Zia Belle; subject to no
adverse liens, claims or encumbrances (whether or not perfected or
preferred);





(l)
evidence satisfactory to Lender that all required licenses have been obtained by
each Borrower and Sherwood and the Philippine Charterer, as applicable, and are
in full force and effect to operate the Vessel according to her intended use,
including, but not limited to, the current operation of the Vessel;





(m) such
other documents, certifications and acknowledgments respecting the Loan
Documents or the Security Documents as Lender shall reasonably
request;





(n) the
continuing compliance by Borrowers and Guarantors of their obligations under the
Loan Agreement as modified by this First Amendment;





(o)
evidence satisfactory to Lender that no Loan Party is in default under the Loan
or any other indenture or loan or credit agreement or any other agreement, lease
or instrument to which it is a party or by which it or its properties may be
bound or affected; or, if such default exists, that it has been waived by the
applicable creditor;





(s)
evidence satisfactory to Lender that (i) the Zia Belle is classed as follows,
without outstanding recommendations or notations, and otherwise in compliance
with the Ship Mortgage:





Panama


Navigation                      Classification


Vessel
Name                                      Patente
No.                              Society                              Class





ZIA
BELLE                                           38142-PEXT       _______                        ___________




and (ii)
all required licenses have been obtained by Sherwood and are in full force and
effect to operate the Zia Belle according to its intended use, including, but
not limited to, the current operation of the Zia Belle; and





(t)
Lender’s receipt of a modification fee of $225,000.00, as well as all other fees
and costs of Lender in connection with this First Amendment and the transactions
contemplated hereby.





Lender’s
waiver of any condition with respect to this First Amendment for a particular
Borrower shall not be deemed absent express written agreement to constitute a
waiver of such condition as it may apply to any other Borrower.





15.   All
references in the Original Loan Agreement and other Loan Documents to
“Guarantor” and “Loan Parties” shall include, without limitation,
Sherwood.  Sherwood shall observe all of the obligations imposed on
each Guarantor under the Loan Document.  All references to the Vessels
or the Collateral under the Original Loan Agreement or other Loan Document shall
include, without limitation, the Zia Belle, and Sherwood shall keep and observe
with respect to the Zia Belle all of the Vessel related obligations imposed on
the owner of a Vessel under the Loan Documents, including all obligations with
respect to insurance and the collateral assignment and encumbrance of rights
related to the Zia Belle, her charter hire and insurances, and the operation of
the Zia Belle.  Without limitation of the foregoing, Sherwood’s
failure to maintain the insurance required under the Loan Documents shall
constitute a default under Section 7.01 (p) of the Original Loan Agreement.
References to the Guaranty Documents shall include the Collateral Documents
executed by Sherwood.





16.   Lender
consents to the change of the classification society for the Mohave Maiden to
“NK.”





17.   Borrowers
agree to pay all costs and expenses in connection with the execution and
recordation of this First Amendment and all other Loan Documents executed in
connection therewith.  In addition, Borrowers shall reimburse Lender
for all costs incurred by Lender in connection with this First Amendment and the
transactions contemplated hereby, including without limitation, the costs of
Lender’s counsel, the costs of Lender’s insurance consultants, and the costs of
Panamanian and other foreign counsel.  Nothing herein shall be deemed
to waive or limit Borrowers’ obligation to reimburse and indemnify Lender as
provided in Section 8.05 of the Original Loan Agreement, and Sherwood agrees to
similarly indemnify and reimburse Lender for any costs, liabilities or expenses
of Lender relating to Sherwood or the Zia Belle.  Borrowers agree to
pay Lender a modification fee of $225,000.00 in connection with this First
Amendment, which shall be fully earned and non-refundable.





18.   This
First Amendment may be executed separately by the Loan Parties and Lender in any
number of counterparts, each of which, when so executed and delivered, shall be
deemed to be an original and all of which, taken together, shall constitute but
one and the same instrument.





19.   THE
VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FIRST AMENDMENT AND THE LOAN
DOCUMENTS EXECUTED IN CONNECTION THEREWITH SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.





20.   Borrowers
and Guarantors, by executing this First Amendment, hereby confirm and
acknowledgment that the amounts owed by them under the Loan Agreement are free
and clear of any deductions, offsets, counterclaims or other
reductions.  Borrowers and Guarantors further acknowledge that Lender
has fully complied with all of its obligations under the Loan Agreement, and
hereby waive, release and discharge Lender from and against any claim, right,
demand or cause of action arising on or before the date of this First Amendment
out of any act or failure to act by Lender or any breach by Lender of any
obligation under or in connection with the Loan Agreement, whether arising under
theories of contract, tort, lender liability or otherwise.











{signature
page follows}









BORROWERS:





AMOROS
MARITIME CORP.








/s/
Christophil B. Costas


By:  Christophil
B. Costas


Title:  Attorney
in Fact





LANCASTER
MARITIME CORP.








/s/
Christophil B. Costas


By:  Christophil
B. Costas


Title:  Attorney
in Fact





CHATHAM
MARITIME CORP.








/s/
Christophil B. Costas


By:  Christophil
B. Costas


Title:  Attorney
in Fact





GUARANTOR:





TBS
INTERNATIONAL LIMITED








/s/
Christophil B. Costas


By:  Christophil
B. Costas


Title:  Attorney
in Fact





SHERWOOD:


SHERWOOD
SHIPPING CORP.





/s/
Christophil B. Costas


By:  Christophil
B. Costas


Title:  Attorney
in Fact








LENDER:


AIG
COMMERCIAL EQUIPMENT FINANCE, INC.





By:
/s/ Richard M. Johnston


Name:  Richard
M. Johnston


Title:  Vice
President





LIST OF SCHEDULES TO FIRST
AMENDMENT TO LOAN AGREEMENT


Schedule
      1-
            List
      of Borrowers and Vessels


Schedule   -
            Forms of Opinion  [Forms of Opinions are included after Schedule 14
      (a)(1)]














SCHEDULE
1








Borrower
            Vessel Name
            Maximum Individual Loan
    Amount*Amoros
      Maritime Corp.
            Hopi
      Princess
            $13,000,000Lancaster
      Maritime Corp.
            Mohave
      Maiden
            $13,000,000Chatham
      Maritime Corp.
            Zuni
      Princess
            $9,000,000Sherwood
      Shipping Corp.
            Zia
      Belle
            N/A














VESSEL
      NAME
                    PANAMA
      NAVIGATION PATENTE NO.
                    PANAMA
      CALL LETTERS
                    PHILIPPINES
      OFFICIAL NO.
                    PHILIPPINES
      CALL SIGN
                    ADDITIONAL
      VESSEL SPECIFICATIONSHOPI
      PRINCESS
                    34293-08
                    3EPG2
                    MNLA000706
                    DYTU
                    LENGTH,
      145.52 METERS, BREADTH, 22.70 METERS, DEPTH, 13.80 METERS, GROSS TONNAGE,
      13,911, NET TONNAGE 7,162MOHAVE
      MAIDEN
                    34295-08
                    3EPG7
                    MNLA000705
                    DYTT
                    LENGTH,
      167.64 METERS, BREADTH, 23.10 METERS, DEPTH, 14.75 METERS, GROSS TONNAGE,
      17,056, NET TONNAGE 10,329ZUNI
      PRINCESS
                    34300-08
                    3EPG6
                    MNLA000703
                    DYTK
                    LENGTH,
      167.64 METERS, BREADTH, 23.10 METERS, DEPTH, 14.75 METERS, GROSS TONNAGE,
      17,066, NET TONNAGE 10,334ZIA
      BELLE
                    38142-PEXT
                    3FZQ7
                    MNLA000716
                    DYVE
                    LENGTH,
      96.52 METERS, BREADTH, 20.42 METERS, DEPTH, 11.11 METERS,
                      GROSS
      TONNAGE, 6,714,
                      NET
      TONNAGE,
2,888














SCHEDULE
2.03A





Form
of Addendum





ADDENDUM
TO PROMISSORY NOTE







This
Addendum to Promissory Note is made as of March __, 2009 with respect to the
Promissory Note dated February 29, 2008 by
[       ] CORP. in the original stated
principal amount of $[   ] (the “Note”) to the order of AIG
COMMERCIAL EQUIPMENT FINANCE, INC.







The last two sentences of the first
paragraph on Page 1 of the Note, commencing “The Interest Rate shall be...” and
“Beginning on the first day..,” respectively, are deleted, and the following
sentences are inserted in replacement thereof:





“The
Interest Rate shall be equal to the greater of (a) seven percent per annum or
(b) LIBOR Rate (as defined in the Loan Agreement) plus 3.50%.  Payee
shall have the right to prospectively increase the interest rate hereunder
following an Event of Default to the Default Rate, as provided
below.  Beginning on the first day of the Adjustment Period (as
defined in the Loan Agreement) following the date hereof, the Interest Rate
hereunder shall be adjusted each Adjustment Period and such adjustment shall be
effective throughout such Adjustment Period.”





The second paragraph of the first page
of the Note is amended and restated to read as follows:





Commencing
on July 1, 2008, and on October 1, 2008 and January 1, 2009, the undersigned
will make quarterly principal payments of
$[          ] each together
with accrued interest.  On March __, 2009, the undersigned will a
principal payment of
$[        ].  On April 1,
2009, July 1, 2009 and October 1, 2009, the undersigned will make an interest
payment in the amount of all accrued but unpaid interest under this
Note.  On January 1, 2010 and on April 1, 2010, the undersigned will
make quarterly payments of accrued interest together with quarterly principal
payments of $[          ] each
together with accrued interest.  Commencing on July 1, 2010, and on
each October 1, January 1 and April 1 thereafter, the undersigned will make
quarterly principal payments of
$[        ] each together with accrued
interest.  A final payment of all remaining principal, interest and
other amounts due hereunder and under the Loan Documents (as defined in the Loan
Agreement) will be payable on April 1, 2012, the Maturity Date. Interest
hereunder shall accrue on the unpaid balance of this Note from the date of this
Note until paid in full, at the Interest Rate (subject to Payee’s right to
prospectively increase the interest rate to the Default Rate following an Event
of Default), adjusted on the first day of each Adjustment
Period.  Interest shall be payable in arrears on the dates provided
above, and upon prepayment in part of the unpaid principal balance of this Note
(with respect to the amount so prepaid) and upon payment (including prepayment)
in full of the unpaid principal balance of this Note.  All payments
received by Payee shall be applied first to interest and then to
principal.




The final paragraph of the first page
of the Note, which is continued and completed on the second page of the Note, is
amended and restated to read as follows:





In addition to the required payments
set forth above, the undersigned shall have the right to prepay this Note, in
whole or in part, at any time following the first anniversary date of this Note
on fifteen (15) days prior written notice to the Payee, provided,
that the amount of the prepayment is at least $500,000.00 and the prepayment is
made in multiples of $500,000.00, and furtherprovided
that on the date of such prepayment, the undersigned shall pay the principal
amount of this Note being so prepaid (the “Prepayment Amount”),
together with all interest, fees and other amounts payable on the amount so
prepaid or in connection therewith to the date of such prepayment and, the
Prepayment Fee set forth below.  If the undersigned prepays this Note
in full or in part, the undersigned shall pay, on the date of such prepayment, a
fee  (the “Prepayment Fee”) to
the Payee in an amount equal to (a) 3% of the amount of the principal
prepayment, if prepayment is made before March __ 2010; (b) 2% of the amount of
the principal prepayment, if prepayment is made on or after March __, 2010 but
before March __, 2011, or (c) 1% of the amount of the principal prepayment, if
prepayment is made on or after March __, 2011, provided that the
Prepayment Fee shall be charged and paid only to the extent permitted by
Applicable Law.  No prepayments will be permitted prior to the first
anniversary date of this Note.  Any prepayment pursuant to this
paragraph shall be applied to the installments hereof in the inverse order of
maturity. In addition, at the time of any prepayment, the undersigned shall pay
to Payee such amount as will compensate Payee for any loss, cost, expense,
penalty, claim or liability incurred by Payee as a result of such prepayment
which requires the Payee to prematurely break any related swap, interest rate
hedge or other derivative arrangement.  The Payee shall have no obligation
to purchase or enter into any swap or other derivative arrangement in connection
with funding or maintaining the loan evidenced by this Note.





[          ]CORP.









By:


Name:


Title:   Attorney
in Fact


ACCEPTED
BY LENDER:





AIG
COMMERCIAL EQUIPMENT FINANCE, INC.








By:


Name:


Title:





SCHEDULE
14 (a) (1)


Form
of Secured Guaranty







CHATHAM
MARITIME CORP.




SECURED
GUARANTY




SECURED
GUARANTY (“Guaranty”), dated as of the 27th day of March, 2009 made by Sherwood
Shipping Corp., a Marshall Islands corporation (the “Guarantor”), in favor of
AIG Commercial Equipment Finance, Inc., a Delaware corporation
(“Lender”).




WHEREAS,Lender has made a
loan to Chatham Maritime Corp., a Marshall Islands corporation (the “Borrower”)
in the principal amount of US$13,000,000.00 (the “Loan”), and other borrowers in
connection and in accordance with that certain Loan Agreement dated as of
February 29, 2008, between the Borrower, the other borrowers and guarantor named
therein and the Lender, as amended by that certain First Amendment to Loan
Agreement dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time, the “Loan Agreement”). The Loan is evidenced by that
certain Promissory Note in the principal amount of the Loan by Borrower dated
February 29, 2008, as amended by Allonge of even date therewith, and as further
amended by that certain Addendum to Promissory Note dated as of the date hereof
(collectively, the “Note”); and is secured, inter alia, by a Panamanian First
Naval Mortgage dated February 29, 2008 by Borrower and various assignments
executed in connection therewith, including a First Amendment to Panamanian
First Naval Mortgage of even date herewith (collectively, as amended,
supplemented or otherwise modified from time to time, the “Borrower Security
Documents”); and




WHEREAS,Borrower has or may
executed various other agreements, notes, leases or other documents or
instruments in connection with the Loan and the Loan Agreement (such documents,
together with the Loan Agreement, the Note and the Borrower Security Documents,
collectively, as amended, supplemented or otherwise modified from time to time,
the “Agreements”); and




WHEREAS,to secure this
Guaranty as well as the Loan and all other indebtedness of the Borrower under
the Agreements, together with all other indebtedness of the other Borrowers
under the Loan Agreement and all related loan documents, Guarantor has executed
and delivered the following instruments, all of which are dated as of the date
hereof: (i) a Panamanian First Naval Mortgage executed by Guarantor in favor of
Lender with respect to the “Zia Belle” (the “Vessel”); (ii) that certain
Assignment of Charter Hire executed by Guarantor in favor of Lender with respect
to the Vessel; and (iii) that certain Assignment of Insurances executed by
Guarantor and the other assignors named therein in favor of Lender with respect
to the Vessel; and




WHEREAS,it is a condition to
the modification of the financing provided by, or the acquisition of the rights
transferred to, Lender under the Agreements that Guarantor, who has a financial
interest in Borrower, shall have executed and delivered this
Guaranty.




NOW, THEREFORE,in
consideration of the premises and to induce Lender to modify, enter into or
become a party to the Agreements, as the case may be, Guarantor hereby agrees as
follows:




SECTION 1.Guaranty.
Guarantor hereby absolutely, unconditionally and irrevocably guarantees, jointly
and severally, the prompt and punctual payment and due performance and
observance of all obligations of Borrower now or hereafter existing under the
Agreements, which may in any manner whatsoever be presently or hereafter due and
owing, including without limitation, the payment of all amounts now or hereafter
due from Borrower under the Note, the Loan Agreement and the other Agreements
(collectively, the “Obligations”).




SECTION 2.Guaranty
Absolute. Guarantor jointly and severally guarantees that the Obligations
will be paid, performed and observed strictly in accordance with the terms of
the Agreements, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of Lender
with respect thereto. The liability of Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:




(i)           any
lack of validity, regularity or enforceability of any of the Agreements or any
other agreement or instrument relating thereto;




(ii)           any
lack of validity, regularity or enforceability of this Guaranty or any other
agreement or instrument relating hereto;




(iii)           any
modification or change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other modification, change,
amendment or waiver of or any consent to departure from any term of any of the
Agreements;




(iv)           any
exchange, release or non-perfection of any collateral, or any release or
Obligations;




(v)           any
failure on the part of Lender or any other person or entity to exercise, or any
delay in exercising, any right under the Agreements or any other document or
instrument delivered in connection therewith; or




(vi)           any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, Borrower, the Guarantor or any other guarantor with respect to the
Obligations (including, without limitation, all defenses based on suretyship or
impairment of collateral, and all defenses that Borrower may assert to the
repayment of the Obligations, including, without limitation, failure of
consideration, breach of warranty, fraud, payment, statute of frauds,
bankruptcy, lack of legal capacity, statute of limitations, lender liability,
accord and satisfaction, and usury), this Guaranty and the obligations of the
Guarantor under this Guaranty.




Guarantor
hereby agrees that if Borrower or any other guarantor of all or a portion of the
Obligations is the subject of a bankruptcy proceeding or similar proceeding
under Title 11 of the U.S. Code or any similar legislation relating to
bankruptcy or insolvency, it will not assert the pendency of such proceeding or
any order entered therein as a defense to the timely payment of the Obligations.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by Lender upon the insolvency, bankruptcy or
reorganization of Borrower or otherwise, all as though such payment had not been
made.




Guarantor’s
obligations and liability under this Guaranty shall be on a “joint and several”
basis along with Borrower to the same degree and extent as if Guarantor had been
and/or will be a co-principal obligor of the Obligations. In the event that
there is more than one Guarantor under this Guaranty, or in the event that there
are other guarantors, endorsers or sureties of all or any portion of the
Obligations, Guarantor’s obligations and liability hereunder shall further be on
a “joint and several” basis along with such other guarantors, endorsers and/or
sureties.




SECTION 3.Waivers.
Guarantor hereby waives:




(i)           promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations and this Guaranty;




(ii)           any
requirement that Lender protect, secure, perfect or insure any security interest
or lien on any property subject thereto or exhaust any right to take any action
against Borrower or any other person or entity or any collateral;




(iii)           any
right to receive notice of any disposition or retention by Lender of any
collateral and right of redemption relating to any collateral;




(iv)           any
right to demand or require collateral security from Borrower or any other person
as provided under applicable law or otherwise;




(v)           any
modification or amendment of the Obligations or any of the Agreements, or the
impairment of real security held for such Obligations, by Lender as provided
under applicable law or otherwise;




(vi)           notice
of Lender’s acceptance of this Guaranty;




(vii)           presentment
for payment of the Obligations, notice of dishonor and of nonpayment, notice of
intention to accelerate, notice of acceleration, protest and notice of protest,
collection or institution of any suit or other action by Lender in collection
thereof, including any notice of default in payment thereof, or other notice to,
or demand for payment thereof, on any party;




(viii)                      any
right to require Lender to notify Guarantor of any nonpayment relating to any
collateral directly or indirectly securing the Obligations, or notice of any
action or nonaction on the part of Borrower, Lender, or any other guarantor,
surety or endorser of the Obligations, or notice of the creation of any new or
additional Obligations subject to this Guaranty;




(ix)           any
right to require Lender to notify Guarantor of the terms, time and place of any
public or private sale of any collateral directly or indirectly securing the
Obligations;




(x)           any
election of remedies by Lender that may destroy or impair Guarantor’s
subrogation rights or Guarantor’s right to proceed for reimbursement against
Borrower or any other guarantor, surety or endorser of the Obligations,
including without  limitation, any loss of rights Guarantor may suffer
by reason of any law limiting, qualifying, or discharging the
Obligations;




(xi)           any
disability or other defense of Borrower, or any other guarantor, surety or
endorser, or any other person, or by reason of the cessation from any cause
whatsoever, other than payment in full of the Obligations; and




(xii)           any
statute of limitations or prescriptive period, if at the time an action or suit
brought by Lender against Guarantor is commenced, there are any outstanding
Obligations which are barred by any applicable statute of limitations or
prescriptive period.




SECTION 4.Subrogation.
Guarantor hereby agrees it will not exercise any rights which it may acquire by
way of subrogation under this Guaranty, by any payment made hereunder or
otherwise, until all the Obligations shall have been paid in full. If any amount
shall be paid to the Guarantor on account of such subrogation rights at any time
when all the Obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of Lender and shall forthwith be paid to Lender to
be credited and applied upon the Obligations, whether matured or unmatured, in
accordance with the terms of the Agreements. If (i) the Guarantor shall make
payment to Lender of all or any part of the Obligations and (ii) all the
Obligations shall be paid, performed and observed in full, Lender will, at the
Guarantor’s request, execute and deliver to the Guarantor appropriate documents,
without recourse and without representation or warranty, necessary to evidence
the transfer by subrogation to the Guarantor of an interest in the Obligations
resulting from such payment by the Guarantor.




SECTION 5.Representations
and Warranties. Guarantor hereby represents and warrants as
follows:




(a)           Due Execution, Etc.
The execution, delivery and performance (including the incurrence of the
Obligations hereunder) by the Guarantor of this Guaranty do not and will not (i)
contravene Guarantor’s organizational documents or any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or any
contractual restriction binding on or affecting the Guarantor or any of its
properties, or (ii) result in or require the creation or imposition of any lien
(other than pursuant hereto) upon or with respect to any of the Guarantor’s
properties. The Guarantor has been duly formed and is in good standing in its
jurisdiction of organization and is duly qualified as a foreign business entity
in all jurisdictions where it must be qualified pursuant to applicable law. The
Guarantor is not in default under any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any such contractual
restriction, which default would have a Material Adverse Effect on the Guarantor
or on the ability of the Guarantor to carry out its obligations under this
Guaranty.




(b)           Government Consents.
No authorization, consent, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery or performance by the Guarantor of this
Guaranty.




(c)           Legal, Valid and Binding
Nature. This Guaranty is the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its
terms.




(d)           Solvency. The fair
value of the property of the Guarantor exceeds the total amount of liabilities
(including, without limitation, contingent liabilities) of the Guarantor; the
present fair market value of the assets of the Guarantor exceeds the amount that
will be required to pay the probable liability of the Guarantor on its existing
debts as they become absolute and matured; the Guarantor is able to realize upon
its assets and pay its debts and other liabilities, contingent obligations and
other commitments as they mature in the normal course of business; the Guarantor
does not intend to, and does not believe that it will, incur debts or
liabilities beyond the Guarantor’s ability to pay as such debts and liabilities
mature; and the Guarantor is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which the property
remaining with the Guarantor would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which the
Guarantor is engaged. In computing the amount of contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount which,
in light of all facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.




(e)           Absence of
Litigation. There are no actions, suits, investigations, litigation or
proceedings pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor or the properties of the Guarantor before any court,
arbitrator or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or which purports to affect any part of
the transactions contemplated hereby or by the Agreements or the legality,
validity or enforceability of this Guaranty. There are no actions, suits,
investigations, litigation or proceedings pending or threatened against or
affecting the Guarantor or its affiliates or subsidiaries of the Guarantor or
the properties of the Guarantor or its affiliates or subsidiaries before any
court, arbitrator or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign which, if determined adversely to the
Guarantor, would have a Material Adverse Effect on the financial condition or
continued operation of Guarantor or its affiliates or subsidiaries on a
consolidated basis or any part of the transactions contemplated hereby or by the
Agreements.




(f)           Payment of Taxes. The
Guarantor has filed all tax returns (federal, provincial, local and foreign)
required to be filed and paid all taxes shown thereon to be due, including
interest and penalties, except for such taxes as are being contested in good
faith and by proper proceedings and with respect to which appropriate reserves
are being maintained by the Guarantor, or except where the failure to file such
returns or pay such taxes would not have a Material Adverse Effect on the
Guarantor or otherwise on the ability of the Guarantor to carry out its
obligations under this Guaranty.




SECTION 6.Integration.
This Guaranty together with the Loan Documents constitutes the entire agreement
and understanding between Lender and Guarantor relating to the subject matter
hereof, and supersedes all prior negotiations, agreements and understandings
relating to such subject matter. In entering into this Guaranty, Guarantor
acknowledges that it is relying on no statement, representation, warranty,
covenant or agreement of any kind made by Lender or any employee or agent of
Lender.




SECTION 7.  Amendments,
Etc. No amendment or waiver of any provision of this Guaranty or consent
to any departure by the Guarantor herefrom shall in any event be effective
unless the same shall be in writing and signed by Lender, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.




SECTION 8.Addresses
for Notices. All notices, requests, demands and other communications
provided for hereunder shall be in writing and sent in accordance with the terms
and conditions of the Loan Agreement.




SECTION 9.No
Waiver; Remedies. No failure on the part of Lender to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or in any of the Agreements or other Loan Documents.




SECTION 10.Right of
Set-off. Upon the occurrence and during the continuance of any Event of
Default Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by Lender to or for the credit or the
account of the Guarantor against any and all of the obligations of the Guarantor
now or hereafter existing under this Guaranty, irrespective of whether or not
Lender shall have made any demand under this Guaranty and although such
obligations may be contingent and unmatured. Lender agrees promptly to notify
the Guarantor after any such set-off and application, provided that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of Lender under this Section are in addition to the
other rights and remedies (including, without limitation, other rights of
set-off) which Lender may have.




SECTION 11.Continuing
Guaranty; Transfer of Obligations. This Guaranty is a continuing guaranty
and shall (i) remain in full force and effect until payment in full of the
Obligations and all other amounts payable under this Guaranty, (ii) be binding
upon the Guarantor and its successors and assigns, and (iii) inure to the
benefit of and be enforceable by Lender and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (iii), Lender
may assign or otherwise transfer the right to collect the Obligations to any
other person or entity, and such other person or entity shall thereupon become
vested with all the rights in respect thereof granted to Lender herein or
otherwise.




SECTION 12.Indemnification.
Guarantor hereby agrees, jointly and severally, to indemnify and hold harmless
Lender and its affiliates and their respective directors, officers, employees
and agents, including all professionals (each an “Indemnified Party”) from and
against any and all expenses, losses, claims, damages and liabilities
(including, without limitation, all legal fees and disbursements of attorneys
and other professionals incurred by or asserted against any Indemnified Party in
connection with or arising out of, relating to, or by reason of any
investigation, litigation or proceeding arising out of, relating to or in
connection with any claims made by any person or entity in any way relating to
this Guaranty or the  transactions contemplated hereby, but excluding
therefrom all expenses, losses, claims, damages, and liabilities arising out of
or resulting from the gross negligence or willful misconduct of any Indemnified
Party.




SECTION 13.GOVERNING
LAW. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT
OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.




SECTION 14.JUDICIAL
PROCEEDINGS. GUARANTOR AND, BY ITS ACCEPTANCE HEREOF, LENDER, HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE
ARISING UNDER OR RELATING TO THIS GUARANTY AND AGREES THAT ANY SUCH DISPUTE
SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY. THE PARTIES AGREE THAT ANY
ACTION OR PROCEEDING ARISING UNDER OR RELATED TO THIS GUARANTY MAY BE COMMENCED
IN ANY FEDERAL OR STATE COURT SITTING IN THE SOUTHERN DISTRICT OF NEW YORK AND
THE PARTIES IRREVOCABLY SUBMIT TO THE JURISDICTION OF EACH SUCH COURT AND AGREE
NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER, OR THAT THE AGREEMENT OR THE SUBJECT MATTER THEREOF OR THE TRANSACTION
CONTEMPLATED HEREBY OR THEREBY MAY NOT BE ENFORCED IN OR BY SUCH COURT. THE
GUARANTOR AND LENDER AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.




SECTION 16.DEFINITIONS.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Loan Agreement.




SECTION 17.COLLATERAL.
Guarantor hereby waives any and all rights to claim a lien or other security
interest in and to any of the Vessels securing the obligations arising under the
Loan Agreement. In the event of any Event of Default, Guarantor shall waive any
possessory or other right in and to all such Vessels.




[signature
pages follow]







IN WITNESS WHEREOF,the
Guarantor has executed this Guaranty as of the date first above
written.




GUARANTOR:




Sherwood
Shipping Corp.




By:




Name:  Christophil
B. Costas




Title:  Attorney
in Fact





[Cardillo
& Corbett Letterhead]





March 27,
2009




AIG
Commercial Equipment Finance, Inc.




5700
Granite Parkway




Suite
850




Plano,
Texas 75024




Re:
            First
      Amendment to Loan Agreement dated March 27, 2009 (the "First Amendment")
      by and among Amoros Maritime Corp., Chatham Maritime Corp. and Lancaster
      Maritime Corp. as Borrowers (each a "Borrower" collectively, the
      "Borrowers"), Sherwood Shipping Corp. ("Sherwood") TBS International
      Limited, as Parent Guarantor and AIG Commercial Equipment Finance, Inc.,
      as Lender (the "Lender")




Gentlemen:




We have
acted as counsel for the Borrowers, Sherwood and the Parent Guarantor, all in
connection with the First Amendment to the Loan Agreement dated February 29,
2008, (the "Loan Agreement') among the Borrowers, the Parent Guarantor and the
Lender pursuant to which the Lender made a Loan to the Borrowers in the
principal amount of $35,000,000.  Capitalized terms used herein, but
not defined herein, shall have the meaning set forth in the Loan Agreement and
in the First Amendment.




For
purposes of rendering our opinion set forth herein, we have reviewed originals
or copies of the following documents which pertain directly to the First
Amendment (collectively, the " Transaction Documents"):




1.
            First
      Amendment


2.
            Loan
      Agreement;


3.
            Notes
      by each of the Borrowers dated February 29, 2008 set forth below in the
      amount set forth below:




Borrower                                                      Note
Amount




Amoros
Maritime
Corp.                                                      $
9,000,000.00


Chatham
Maritime
Corp.                                                      $13,000,000.00


Lancaster
Maritime
Corp.                                                      $13,000,000.00




4.
            Addendum
      to each of the Notes;


5.
            Ship
      Mortgage by Sherwood in favor of the Lender covering the Panama
      registered, Philippine flag MN ZIA BELLE (the
  "Vessel);


6.
            Assignment
      of Insurances by Sherwood and the other assignors described
      therein;


7.
            Assignment
      of Charter by Sherwood;


8.
            Assignment
      of Charter Hire by the various charterers and service providers described
      therein for the Vessel;


9.
            Secured
      Guaranty by Sherwood;


10.
            First
      Amendment to Panamanian First Naval Mortgage in respect of each of the M/V
      HOPI PRINCESS, M/V ZUNI PRINCESS and M/V MOHAVE
  MAIDEN




For
purposes of rendering our opinion set forth herein, we have also examined
originals or copies of corporate records, documents and instruments relating to
the Borrowers and to Sherwood.  In addition to the foregoing, we have
also reviewed such other certificates, documents and instruments as necessary
for us to render the opinions set forth herein.




In such
examination we have assumed the genuineness of all signatures (other than the
Borrowers, Sherwood and the Parent Guarantor), the authenticity of all documents
submitted to us as originals and the conformity with the original documents of
all documents submitted to us as copies.  As to factual matters we
have, to the extent that relevant facts were not independently established by
us, relied upon certificates of public officials and certificates or
representations made in writing by officers or representatives of the Borrowers
and the representations and warranties of the Borrowers in the Transaction
Documents.  We have no knowledge that any such certificates,
representations or warranties are incorrect.  We have also assumed the
power, authority and legal right of all parties to the Transaction Documents
other than the Borrowers and Sherwood to enter into and perform their respective
obligations thereunder and the due authorization, execution and delivery of the
Transaction Documents by such parties.  We have further assumed the
validity and enforceability of the Transaction Documents under all applicable
laws other than the federal laws of the United States of America, the laws of
the State of New York and the laws of the Republic of the Marshall
Islands.  With respect to the laws of the Republic of Panama and of
Bermuda, we have relied on the opinion of special Panamanian counsel, Patton,
Moreno & Asvat and special Bermuda counsel, Conyers, Dill &
Pearman.




In
rendering this opinion, we express no opinion as to the effect of any laws of
any jurisdiction other than the federal laws of the United States of America,
the laws of the State of New York, and the laws of the Republic of the Marshall
Islands.  Insofar as Marshall Islands law is involved in this opinion,
we have made such examination of the laws of the Marshall Islands as we
considered necessary or appropriate in connection with the opinions expressed
herein and we have relied upon opinions and advice of Marshall Islands counsel
rendered in transactions which we consider to be sufficiently similar to those
contemplated by the Transaction Documents as to afford a satisfactory basis for
such opinions, upon our independent examination of the Marshall Islands
Associations Law of 2007 as published by The Marshall Islands Maritime &
Corporate Administrators, Inc., and upon our knowledge of the interpretation of
analogous laws in the United States of America.  In rendering this
opinion, we have assumed that the persons who executed the aforementioned
certificates of public officials are duly authorized to act in such capacity on
behalf of the Registrar of Corporations of the Republic of the Marshall
Islands.




Based
upon our examination of the foregoing, subject to the qualifications herein set
forth, we are of the opinion that:




1.           Each
Borrower and Sherwood is a company validly formed and duly existing under the
Marshall Islands, is qualified to do business and own and operate its assets and
is in good standing under the laws of the Marshall Islands.




2.           Each
Borrower and Sherwood has all requisite power and authority, corporate or
otherwise, to conduct its business, to own its assets and to execute and
deliver, and to perform all of its obligations under the Transaction Documents
and the Security Documents to which it is a party.




3.           The
individuals executing the Transaction Documents on behalf of each Borrower and
Sherwood have been duly authorized and empowered to do so.




4.           The
execution, delivery and performance by each Borrower and Sherwood of the
Transaction Documents to which it is a party, have been duly authorized by all
necessary action and do not and will not (i) require any further or
additional consent or approval of the directors, shareholders or partners of
such Borrower and Sherwood, or any authorization, consent or approval by any
governmental department, commission, board, bureau, agency or instrumentality,
or (ii) violate any provision of any law, rule or regulation having
applicability to such Borrower and Sherwood, or of the, articles of
incorporation, By-laws or other organizational documents of such Borrower and
Sherwood.




5.           The
execution, delivery and performance by each Borrower and Sherwood and the Parent
Guarantor of the Transaction Documents to which it is a party do not and will
not (i) to the best of our knowledge after due inquiry, violate any
provision of any order, writ, injunction or decree presently in effect having
applicability to such Borrower, Sherwood or the Parent Guarantor, or
(ii) to the best of our knowledge after due inquiry, result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which such Borrower, Sherwood or the
Parent Guarantor is a party or by which either of them or their properties may
be bound or affected.




6.           All
of the Transaction Documents have been duly executed and delivered to Lender by
each Borrower and Sherwood, and no consents, permissions or authorizations are
required from any other parties in connection with the execution and delivery of
the Transaction Documents.




7.           Each
of the Transaction Documents to which Sherwood and any Borrower is a party
(except the Ship Mortgage) is a legal, valid and binding instrument, enforceable
against Sherwood and such Borrower in accordance with its terms.




8.           The
courts of the State of New York would, in a properly presented case with respect
to the Transaction Documents, enforce against the Borrower, Sherwood and the
Parent Guarantor the choice of New York law provisions of the Transaction
Documents.




9.           To
the best of our knowledge after due inquiry, each Borrower and Sherwood has all
permits and approvals that are required for execution and delivery of the
Transaction Documents and the operation of its business and assets.




10.           There
are no actions, suits or proceedings pending or, to the best of our knowledge
after due inquiry, threatened against any Borrower, Sherwood or the Parent
Guarantor, or the properties of any Borrower, Sherwood or the Parent Guarantor
before any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, which, if determined adversely to such
Borrower, Sherwood or the Parent Guarantor, would have a Material Adverse Effect
on the financial condition, properties, or operations of such party and its
ability to perform under the Transaction Documents.




11.           After
due inquiry, we have no knowledge of any outstanding judgments against any
Borrower, Sherwood or the Parent Guarantor.




The
opinions expressed in this letter are made subject to and are qualified by the
following:




a)
            The
      enforceability of the Transaction Documents shall be subject to applicable
      bankruptcy, insolvency, reorganization, moratorium and similar laws of
      general application affecting the rights and remedies of secured
      creditors.




b)
            The
      effect and application of general principles of equity, whether considered
      in a proceeding in equity or at
law;




c)
            Limitations
      imposed by or resulting from the exercise by any court of its discretion;
      and




d)
            Limitations
      imposed by reason of generally applicable public policy principles or
      considerations.




In our
opinion, the foregoing exceptions (b), (c) and (d) do not make the remedies and
procedures which would be available under the Transaction Documents or
applicable law inadequate for the ultimate practical realization of the primary
substantive benefits intended to be available to the Lender under the
Transaction Documents.




The
opinions expressed in this letter are given solely for the benefit of Lender,
its successors and assigns (including any purchaser of all or any portion of the
Loan), and any law firm representing Lender, its successors or assigns
(including any purchaser of the Loan), in the sale of the Loan in connection
with the transaction referred to herein.  The opinions expressed in
this letter are rendered as of the date hereof and we express no opinion as to
circumstances or events that may occur subsequent to such date.




Very
truly yours,




CARDILLO
& CORBETT




By:/s/ Christophil B.
Costas


Christophil
B. Costas










[Patton,
Moreno & Asvat Letterhead]








27th
      March, 2009





Messrs.


AIG
      Commercial Equipment Finance Inc.


5700
      Granite Parkway


Suite
      850


Plano,
      Texas 75024


U.S.A.





Dear
      Sirs,





RE:  US$
      35,000,000 Loan to the Borrowers





1.
            We
      have acted as special Panamanian legal advisers for Amoros Maritime Corp.
      ("Amoros"), Lancaster Maritime Corp. ("Lancaster") and Chatman Maritime
      Corp. ("Chatinan" which together with Amoros and Lancaster will be
      hereinafter referred to as the "Borrowers"), Sherwood Shipping Corp. as
      guarantor ("Sherwood" which together with the Borrowers will be
      hereinafter referred to as the "Owners") and TBS International Limited
      (the "Parent Guarantor"), all in connection with the Loan Agreement dated
      February 29, 2008 (the "Original Loan Agreement") which has been
      supplemented and amended by a First Amendment to Loan Agreement dated 27th
      March, 2009 (the "First Loan Amendment" which together with the Original
      Loan Agreement will be hereinafter referred to as the "Agreement") and the
      loan made pursuant thereto by AIG Commercial Equipment Finance, Inc. (the
      "Mortgagee") in connection with the transactions contemplated therein and
      pursuant to which the Mortgagee has agreed to make available a facility of
      up to US$35,000,000 (the "Loan") to the Borrowers. Capitalized terms used
      herein, but not defined herein; shall have the meaning set forth in the
      Agreement.





2.
            For
      the purpose of giving this opinion, we have only examined original,
      facsimile or photocopies of:





a)
            the
      First Loan Amendment;





b)
            a
      first preferred mortgage dated 27th March. 2009 (the "Sherwood Mortgage")
      executed by Sherwood in favour of the Mortgagee over the vessel "Zia
      Belle" registered in the name of Sherwood under the flag of the Republic
      of Panama (the "Zia Vessel"); and





c)
            a
      first fleet amendment to Panamanian naval mortgage dated 27th March 2009
      (the "First Fleet Mortgage Amendment") executed by the Borrowers in favour
      of the Mortgagee amending first mortgages registered at the Public
      Registry Office (the "First Mortgages") over the vessels "Hopi Princess"
      (the "Hopi Vessel") registered in the name of Amoros under the flag of the
      Republic of Panama, the "Zuni Princess" (the "Zuni Vessel") registered in
      the name of Chatham under the flag of the Republic of Panama, the "Mohave
      Maiden" registered in the name of Lancaster under the flag of the Republic
      of Panama (the "Mohave Vessel" which together with the Zuni Vessel and the
      Hopi Vessel will be hereinafter referred to as the
    "Vessels").





items (a)
to (c) will be hereinafter referred to as the "Documents").





We have
made no independent investigation of any factual information contained in the
Documents. However, we have undertaken searches at the Shipping Bureau and
Public Registry in the Republic of Panama in respect of the Vessels as of the
date hereof.





Our due
diligence and similar factual investigations have been limited to the referred
searches.




3.
            This
      legal opinion is limited to and is given on the basis of the laws of
      Panama in force as of the date hereof as currently applied by the Courts
      of Panama. We have not investigated, and we do not express or imply any
      opinions whatsoever with respect to the laws of any other jurisdiction or
      the effects thereof.




4.
            For
      the purposes of this opinion, we have
assumed:




(a)
            that
      the Documents are within the capacity and power of, and have been duly
      authorized, executed and delivered by each of the
  parties;





(b)
            the
      genuineness of all signatures on all documents submitted, the accuracy of
      al statements appearing therein, and the authenticity and conformity of
      all such documents, whether submitted to us originals or copies
      (including, without limitation, drafts, copies or
      photocopies);





(c)
            that
      the Documents are legal, valid, binding and enforceable according to the
      laws, other than laws of Panama, by which these are expressed to be
      governed;





(d)
            that
      no action suit, proceeding, litigation, or dispute against the Vessels are
      currently taking place or pending which may affect the capacity and/or
      ability of the Owners to enter into and perform their obligations under
      the Documents;





(e)
            that
      the Documents have been executed and delivered outside of
      Panama.





5.
            We
      are of the opinion that insofar as Panamanian law is
      concerned:





(a)
            subject
      to what is stated herein, the Sherwood Mortgage and the First Fleet
      Mortgage Amendment (i) constitute valid and legally binding obligations of
      the Owners enforceable in accordance with its terms and the laws of the
      Republic of Panama and (ii) contains the customary remedies included in
      similar documents used by international institutional lenders to
      effectuate naval mortgages encumbering vessels registered in the Republic
      of Panama in transactions involving substantial amounts of
      credit;





(b)
            the
      execution and delivery of, the performance of its obligations under, and
      compliance by the Owners with the provisions of, the Sherwood Mortgage and
      the First Fleet Mortgage Amendment will not contravene any existing
      applicable law, statute, rule or regulation, decree or permit of the
      Republic of Panama;





(c)
            subject
      to what is stated below, no consents, authorizations, licenses or
      approvals of, or filings or registration with or declarations to, any
      governmental or public bodies or authorities or courts of Panama are
      required by the Owners to authorize, or required by the Owners in
      connection with, the execution, delivery, validity, enforceability or
      admissibility in evidence of the Sherwood Mortgage and First Fleet
      Mortgage Amendment or the performance of the Owners of its obligations
      thereunder;





(d)
            save
      for the permanent registration of the Sherwood Mortgage and the First
      Fleet Mortgage Amendment together with attachments thereto in Panama, it
      is not necessary to ensure the legality, validity, enforceability or
      admissibility in evidence of the Documents that any other instrument be
      notarized, filed, recorded, registered or enrolled in any court, public
      office elsewhere in the





(e)
            Republic
      of Panama or that any stamp, registration or similar tax or charge be paid
      in the Republic of Panama on or in relation to any of the Documents save
      for the customary mortgage registration fees, and a stamp tax at the rate
      of US$0.10 for each US$100 of the face value of the obligations evidenced
      in the Documents which may be levied in the event that any of the
      Documents are submitted before any administrative or judicial authority in
      Panama;





(f)
            the
      Sherwood Mortgage on account of its preliminary registration in the Public
      Registry Office of the Republic of Panama constitutes a legal and valid
      mortgage over the Zia Vessel, and will so constitute as long as the
      Sherwood Mortgage is filed for final registration at the Panama Registry
      Office whitin six months from the date of their preliminary registration
      and the definite registration is completed. Upon such registration the
      Sherwood Mortgage will rank from the date of its preliminary registration
      as a first mortgages over the Zia
Vessel.





the First
Fleet Mortgage Amendment on account of its preliminary registration in the
Public Registry Office of the Republic of Panama constitutes a legal and valid
mortgage amendment over the Mortgages of the respective Vessels, and will so
constitute as long as the First Fleet Mortgage Amendment is filed for final
registration at the Panama Registry Office whithin six months from the date of
their preliminary registration and the definite registration is completed. Upon
such registration the First Fleet Mortgage Amendment will rank from the date of
their preliminary registration as a first amendment to the Mortgages over the
Vessels.





The "dual
registry" of the Vessels with the Maritime Industry Authority of the Republic of
the Philippines will not adversely affect the validity enforceability or
priority of the Sherwood Mortgage or the First Fleet Mortgage
Amendment.





(g)
            no
      taxes of the Republic of Panama are imposed by withholding or otherwise on
      any payment to be made by the Owners under the Sherwood Mortgage and the
      First Fleet Mortgage Amendment or are imposed on or by virtue of the
      execution or delivery of the Sherwood Mortgage and the First Fleet
      Mortgage Amendment;





(h)
            the
      courts of the Republic will award a judgment in relation to the Sherwood
      Mortgage and the First Fleet Mortgage Amendment expressed in terms of
      Dollars in respect of any amount due and owing to the Mortgagee under the
      Documents but the Owners shall be entitled to satisfy the judgment in a
      currency which is legal tender in Panama (Balboas an Dollars as of this
      date);





(i)
            the
      Mortgagee will not be deemed to be resident, domiciled, carrying on
      business or subject to taxation in Panama by reason only of the
      negotiation, preparation, execution, performance, enforcement of, and/or
      receipt of any payment due from the Owners under any of the
      Documents;





(j)
            it
      is nor necessary under the laws of the Republic of Panama (i) in order to
      enable the Mortgagee to enforce its rights under the Documents or (ii) by
      reason of the execution, delivery and performance of any the Documents by
      the Mortgagee that the Mortgagee should be licensed qualified or otherwise
      entitled to carry on business in the Republic of
  Panama;





(k)
            the
      Zia Vessel is validly registered as a Panamanian vessel on a provisional
      basis at the Shipping Bureau of the Republic of Panama free from
      registered encumbrances other than the Sherwood Mortgage which rank as a
      first priority mortgage over said vessel in favour of the Mortgagee;
      and





(1)
            the
      Hopi Vessel is validly registered as a Panamanian vessel on a permanent
      basis at the Shipping Bureau of the Republic of Panama free from
      registered encumbrances other than the first mortgage under Microjacket:
      N- 31136, Document: 1354962 which ranks as a first priority mortgage over
      said vessel in favour of the
Mortgagee;





(m)
            the
      Mohave Vessel is validly registered as a Panamanian vessel on a permanent
      basis at the Shipping Bureau of the Republic of Panama free from
      registered encumbrances other than the first mortgage under Microjacket:
      N- 31138, Document: 1348044 which ranks as a first priority mortgage over
      said vessel in favour of the Mortgagee;
and





(n)
            the
      Zuni Vessel is validly registered as a Panamanian vessel on a permanent
      basis at the Shipping Bureau of the Republic of Panama free from
      registered encumbrances other than the first mortgage under Microjacket:
      N-31075, Document: 1350578 which ranks as a first priority mortgage over
      said vessel in favour of the
Mortgagee.





6.
            The
      opinion expressed above is subject to the following
      qualifications:





(a)
            in
      respect of certain enforcement rights of the Mortgagee concerning the
      administration of the Vessels as well as the sale thereof following an
      Event of Default, the following should be
  observer:





(i)
            in
      the event that the Mortgagee takes possession of the Vessels, the
      Mortgagee would have to render accounts to the respective Owners on a
      quarterly basis and at the end of the period of administration unless
      otherwise agreed upon by the
parties;





(ii)
            the
      power of non judicial sale of the Vessel in the Sherwood Mortgage may only
      be exercised upon prior notice of at least twenty calendar days of the
      date on which the sale is to take place, such notice to be given to the
      Owners and all other mortgagees of the vessels whose mortgages are
      recorded at the Public Registry in Panama and otherwise in accordance with
      Article 1527 of the Code of
Commerce;





(iii)
            the
      waiver of the Owners of the right to claim damages from the Mortgagee in
      respect of the certain remedies such as of taking possession and
      management, as well as private sale, of the Vessels may by considered
      unenforceable by a Panamanian court to the extent that the loss or damages
      resulting from such action by the Mortgagee involves willful misconduct,
      recklessness or gross negligence;





(b)
            if
      a final conclusive judgment of a foreign court of competent jurisdiction
      were rendered against the Owners under the Sherwood Mortgage and the First
      Fleet Mortgage Amendment, such judgment would be recognized and enforced
      in the Courts of the Republic of Panama without retrial of the originating
      action by instituting exequatur proceedings in the Courts of Panama and
      upon determination by such tribunal
that:





(i)
            the
      courts of the judgment country would in similar circumstances recognize a
      final conclusive judgment of the courts of the Republic of
      Panama;





(ii)
            the
      judgment has been issued as a consequence of an action "in
      personam";





(iii)
            the
      judgment was rendered after personal service on the
    defendant;





(iv)
            the
      cause of action upon which the judgment was based does not contravene the
      public policy of the Republic of
Panama;





(v)
            the
      documents evidencing the judgment are in authentic form according to the
      law of the relevant foreign court and have been duly legalized by a Consul
      of the Republic of Panama or pursuant to the 1961 Hague Convention on the
      legalization of documents; and





(vi)
            a
      copy of the final judgment has been translated into Spanish by a licensed
      translator in Panama.





(c)
            we
      would point out that obligations which may be unenforceable against a
      primary obligor or in respect of a primary obligation may be similarly
      unenforceable against a guarantor, or in respect of a secondary obligation
      as a guarantee or secondary obligation may not exist without a valid
      principal obligation. In addition, whilst a guarantor may agree not to
      limit his liability to the principal obligation, the guarantee may not
      extend to encompass more than the principal obligation be it in respect of
      the amount involved or the terms or conditions of the said principal
      obligation. In such case, a court may reduce the obligation to that of the
      principal obligation;





(d)
            the
      enforceability of the Documents may be limited by bankruptcy,
      reorganization, insolvency, moratorium and other similar laws affecting
      generally the enforcement of creditors
rights.





7.
            This
      opinion is limited to matters of the laws of the Republic of Panama as of
      the date hereof and in respect of the Sherwood Mortgage and the First
      Fleet Mortgage Amendment and the laws of Panama as they would generally
      apply, and pursuant to which a mortgage may secure the fixed or maximum
      principal referred to therein, an in addition, a mortgage would also
      secure, unless otherwise stated, interest, cost, collections expenses and
      other sums agreed upon under any other concept in the Sherwood Mortgage
      and which would include the Secured Obligations as referred in the
      Sherwood Mortgage to the extent that these relate to the Loan and/ or the
      Zia Vessel.





We would
point out that modifications to the terms of the Sherwood Mortgage and the First
Fleet Mortgage Amendment or Agreement or variations in respect of certain
matters as may be contemplated under the terms thereof, such as interest rates
or default interest rates, or terms of repayment of the Loan, or the possibility
of securing additional or future obligations, may require the registration of
amendments to the Sherwood Mortgage and the First Mortgages or consultation with
us as to the effectiveness thereof.





8.
            The
      opinions expressed in this letter are given solely for the benefit of the
      Mortgagee, its successors and assigns (including any purchaser of all or
      any portion of the Loan), and any law firm representing the Mortgagee, its
      successors or assigns (including any purchaser of the Loan), in the sale
      of the Loan in connection with the transaction referred to herein, The
      opinions expressed in this letter are rendered as of the date hereof and
      we express no opinion as to circumstances or events that may occur
      subsequent to such date.





Yours
      faithfully,








/s/ Belisario
      Porras


Belisario
      Porras





BJP/
      pgc